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On June 25, 2021 the Cyprus Securities and Exchange Commission (CySEC) published a Directive on ‘the Register of Providers of Services Regarding Crypto Assets’ (R.A.D 269/2021), under powers conferred by Law 188(I)/2007 on ‘Prevention and Suppression of Money Laundering and Terrorist Financing’. The amended law incorporated the 5th Anti Money Laundering Directive (EU) 2018/843 (‘AMLD5’) into Cyprus national law.
The Directive provides for the creation and maintenance of a Register for Providers of Services Regarding Crypto Assets (‘the Register’) by CySEC and lays down the procedures for registration and the operating requirements of Crypto Asset Service Providers (CASPs).
Crypto Asset is defined as an asset with a digital representation of value that is neither issued nor guaranteed by a central bank or a public authority, it is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored, and traded electronically, and it does not qualify as fiat currency, electronic money, of financial instruments
TYPES OF SERVICE AND CAPITAL REQUIREMENTS
There are three types of activities regulated by CySEC for which there is a different minimum capital requirement:
CASP | Type of Services in Cryptoassets | Initial Capital |
---|---|---|
Class 1 | CASPs that provide investment advice | EUR 50.000 |
Class 2 |
CASPs providing the service referred to in Class 1 and/or any of the following services: i. reception and transmission of client orders and/or ii. execution of orders on behalf of clients and/or iii. exchange between crypto assets and fiat currency and/or iv. exchange between crypto assets and/or v. participation and/or provision of financial services related to the distribution, offering and/or sale of cryptoassets, including the initial offering and/or vii. placement of crypto assets without firm commitment and/or viii. portfolio management. |
EUR 125.000 |
Class 3 |
CASPs that provide any of the services referred to in Class 1 or 2 and/or: i. administration, transfer of ownership, transfer of site, holding, and/or safekeeping, including custody, of crypto-assets or cryptographic keys or means enabling control over crypto-assets ii. underwriting and/or placement of crypto-assets with firm commitment iii. operation of a multilateral system, which brings together multiple third-party buying and selling interests in crypto-assets in a way that results in a transaction. |
EUR 150.000 |
REGISTRATION PROCESS
Prospective CASPs must submit the relevant application form issued by CySEC for the registration in the CySEC CASP Register, duly completed, which must inter alia include information in relation to:
Upon registration, as well as on an ongoing basis, applicants are expected to satisfy CySEC’s requirements in relation to the following:
PROVISIONS FOR AML
The “Travel Rule” is the obligation to obtain, hold, and transmit originator and beneficiary information in order to identify and report suspicious transactions, monitor the availability of information, take freezing actions, and prohibit transactions where appropriate. Under the “Travel Rule”, any transaction with a value equal to or in excess of 1.000 Euros, must be deemed as material. Where an obliged entity sends a material crypto-asset transfer to a CASP, the relevant obliged entity must immediately and by secure means obtain the following information and submit it to the CASP:
a) the payer’s physical address;
b) the payer’s national identity number;
c) the payer’s customer identification number; or
d) the payer’s date and place of birth.
CHARGES
HOW WE CAN HELP
Our office has established its footprint in the Cypriot Financial Services Market. Our dedicated team can successfully complete and submit your CASP registration to CySEC. Our services relate to the following:
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